After its meeting of the Monetary Policy Committee (MPC) on Tuesday, the Central Bank of Nigeria(CBN) has announced that it is set to adopt a more flexible approach in the management of the foreign exchange market to avoid an “imminent recession”.
The governor of the CBN, Godwin Emefiele, said that details of the new policy would be released in the coming days.
This decision comes few days after the government successfully increased the price of petrol from N86.50 to N145.
For months, despite overwhelming pressure and reasons to devalie the naira, President Muhammadu Buhari consistently refused, saying that he would never devalue the naira beyond the official N197 to a dollar rate.
Analysts believe the government is planning to officially devalue the naira.
Emefiele said the new policy would guarantee improved access to foreign exchange for business to boost the economy.
“It is time to introduce greater flexibility in the management of FOREX market,” the CBN governor said.
“After assessing the various risk profiles available, the committee resolved to adopt the least risky option by adopting a flexible foreign exchange policy to restore the automatic adjustment properties of the exchange rate.
Recent data from the National Bureau of Statistics indicated that the economy contracted to about 0.36 per cent in the first quarter of the year, the first time in over a decade.
Experts say the economy might shrink again in the second quarter which ends in June, a development that will effectively usher in recession in the economy.